PSH-16-0035

*The original of this document contains information which is subject to
withholding from disclosure under 5 U.S. C. § 552. Such material has been deleted from
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United States Department of Energy
Office of Hearings and Appeals
In the Matter of: Personnel Security Hearing )
)
Filing Date: April 22, 2016 ) Case No.: PSH-16-0035
)
__________________________________________)
Issued: August 31, 2016
__________________________
Administrative Judge Decision
__________________________
Wade M. Boswell, Administrative Judge:
This Decision concerns the eligibility of XXX XXX XXXX (hereinafter referred to as “the
individual”) to hold an access authorization1 under the Department of Energy’s (DOE)
regulations set forth at 10 C.F.R. Part 710, Subpart A, entitled, “General Criteria and
Procedures for Determining Eligibility for Access to Classified Matter or Special Nuclear
Material.” As fully discussed below, after carefully considering the record before me in
light of the relevant regulations and Adjudicative Guidelines, I have determined that the
individual should not be granted access authorization at this time.
I. Background
The individual is an applicant for DOE access authorization in conjunction with his
employment by a DOE contractor. As part of his application process, the individual
completed a Questionnaire for National Security Positions (QNSP) in February 2015 in
which he disclosed a number of financial matters, including a bankruptcy petition, failure
to file certain federal and state income tax returns, and tax and consumer debt
delinquencies. See Exhibit 6. The subsequent security investigation confirmed the financial
matters disclosed by the individual and revealed additional financial irregularities. See
Exhibit 4. Following receipt of this information, the Local Security Office (LSO)
conducted a personnel security interview (PSI) with the individual in January 2016. See
Exhibit 7.
1 Access authorization is defined as “an administrative determination that an individual is eligible for access
to classified matter or is eligible for access to, or control over, special nuclear material.” 10 C.F.R. § 710.5(a).
Such authorization will be referred to variously in this Decision as access authorization or security clearance.
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Since the PSI did not resolve the security concerns arising from the individual’s finances,
the LSO advised the individual in a letter (Notification Letter) dated March 23, 2016, that
it possessed reliable information that created substantial doubt regarding his eligibility to
hold a security clearance. In an attachment to the Notification Letter, the LSO explained
that the derogatory information fell within the purview of one potentially disqualifying
criterion set forth in the security regulations at 10 C.F.R. § 710.8, subsection (l) (hereinafter
referred to as Criterion L).2 See Exhibit 1.
Upon his receipt of the Notification Letter, the individual exercised his right under the Part
710 regulations by requesting an administrative review hearing. See Exhibit 2. The Director
of the Office of Hearings and Appeals (OHA) appointed me the Administrative Judge in
the case and, subsequently, I conducted an administrative hearing in the matter. At the
hearing, the LSO presented no witnesses; the individual presented the testimony of one
witness, himself. The LSO introduced eight numbered exhibits into the record; the
individual tendered five lettered exhibits (Exhibits A – E). The exhibits will be cited in this
Decision as “Ex.” followed by the appropriate numeric or alphabetic designation. The
hearing transcript in the case will be cited as “Tr.” followed by the relevant page number.3
II. Regulatory Standard
A. Individual’s Burden
A DOE administrative review proceeding under Part 710 is not a criminal matter, where
the government has the burden of proving the defendant guilty beyond a reasonable doubt.
Rather, the standard in this proceeding places the burden on the individual because it is
designed to protect national security interests. This is not an easy burden for the individual
to sustain. The regulatory standard implies that there is a presumption against granting or
restoring a security clearance. See Department of Navy v. Egan, 484 U.S. 518, 531 (1988)
(“clearly consistent with the national interest” standard for granting security clearances
indicates “that security determinations should err, if they must, on the side of denials”);
Dorfmont v. Brown, 913 F.2d 1399, 1403 (9th Cir. 1990), cert. denied, 499 U.S. 905 (1991)
(strong presumption against the issuance of a security clearance).
An individual must come forward with evidence to convince the DOE that granting or
restoring his or her access authorization “will not endanger the common defense and
security and will be clearly consistent with the national interest.” 10 C.F.R. § 710.27(d).
The individual is afforded a full opportunity to present evidence supporting his or her
eligibility for an access authorization. The Part 710 regulations are drafted so as to permit
the introduction of a very broad range of evidence at personnel security hearings. Even
2 See Section III below.
3 OHA decisions are available on the OHA website at www.energy.gov/oha/office-hearings-and-appeals. A
decision may be accessed by entering the case number in the search engine at www.energy.gov/oha/security-
cases.
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appropriate hearsay evidence may be admitted. 10 C.F.R. § 710.26(h). Thus, an individual
is afforded the utmost latitude in the presentation of evidence to mitigate the security
concerns at issue.
B. Basis for the Administrative Judge’s Decision
In personnel security cases arising under Part 710, it is my role as the Administrative Judge
to issue a Decision that reflects my comprehensive, common-sense judgment, made after
consideration of all the relevant evidence, favorable and unfavorable, as to whether the
granting or continuation of a person’s access authorization will not endanger the common
defense and security and is clearly consistent with the national interest. 10 C.F.R.
§ 710.7(a). I am instructed by the regulations to resolve any doubt as to a person’s access
authorization eligibility in favor of the national security. Id.
III. The Notification Letter and the Security Concerns at Issue
As previously noted, the LSO cited one criterion as the basis for suspending the
individual’s security clearance: Criterion L. Criterion L concerns information that an
individual has engaged in conduct “which tends to show that the individual is not honest,
reliable, or trustworthy….” 10 C.F.R. § 710.8(l). Conduct reflecting questionable
judgment, lack of candor, dishonesty, or unwillingness to comply with rules and
regulations raises questions about an “individual’s reliability, trustworthiness and ability
to protect classified information.” See Guidelines E and F of the Revised Adjudicative
Guidelines for Determining Eligibility for Access to Classified Information, issued on
December 29, 2005, by the Assistant to the President for National Security Affairs, The
White House (Adjudicative Guidelines). With respect to Criterion L, the LSO alleges, inter
alia, that the individual: (1) has not filed his federal or state income tax returns for 2010,
2011, 2012, 2013, and 2014; (2) has unpaid federal tax liens for 2007, 2008, and 2009, and
is delinquent $36,000 on his federal taxes; (3) has 13 outstanding collection accounts
aggregating in excess of $7,200; (4) has an outstanding judgment as a result of a financial
default; and (5) filed petitions for bankruptcy protection in 1998 and 2008. Ex. 1 at 1-2.
In light of the information available to the LSO, the LSO properly invoked Criterion L.
IV. Findings of Fact
At the hearing, the individual clarified and updated information previously provided to the
LSO; however, his testimony rarely challenged the underlying financial concerns noted by
the LSO in the Notification Letter. At times the individual’s testimony was inconsistent
with respect to certain details of his financial history and the current status of certain
matters. In those instances, I have carefully considered the totality of the individual’s
testimony, the entirety of the written record, and the arguments presented by both the
individual and the LSO in reaching the findings of fact set forth herein.
Federal Income Tax Matters. The individual is subject to an outstanding federal tax lien in
the amount of $36,000, which relates to his federal income tax returns for 2007, 2008 and
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2009. Tr. at 29, 33. The individual has made no payments on the tax lien and, prior to the
issuance of the Notification Letter, initiated no communications with the U.S. Internal
Revenue Service (IRS) on these outstanding taxes. Id. at 33, 54. The individual filed federal
tax returns for 2010 and 2013, without payment of outstanding taxes due for those tax
years. Id. at 30, 48-49, 64-65. The individual was advised by the IRS in April 2016 that his
outstanding federal taxes aggregated $56,000, including the unpaid $36,000 federal tax
lien. Id. at 31.
As of the date of the hearing, the individual had not filed his federal income tax returns for
2011, 2012 and 2014.4 Id. at 23, 27, 49. The individual had filed his 2015 federal income
tax return in a timely manner; however, the IRS rejected it due to an error. For the 2015
tax year, the individual had overpaid federal taxes due for that year. Id. at 27, 31, 49.
State Income Tax Matters. The individual’s state income tax liability for 2006, 2007 and
2009 was satisfied through garnishment of his wages at a prior place of employment.
Ex. 2 at 5-6. Notwithstanding the satisfaction of those tax liens (in 2011 and 2014), the
individual has additional outstanding state tax debt for subsequent years (2010 and 2013)
in an amount that has not been determined. Id.; Tr. at 51, 53. As of the date of the hearing,
the individual had not filed his state income tax returns for 2011, 2012 and 2014 and may
owe additional amounts for those years. Id. at 24, 27-28.
The individual filed his 2015 state income tax return and had overpaid state taxes due for
that year. Id. at 27-28.
Financial Accounts. The Notification Letter detailed that the individual had 13 collection
accounts outstanding. Ex. 1 at 1-2. As of the date of the hearing, the individual had satisfied
five of those accounts and made payment arrangements (together with progress payments)
on three additional accounts. Ex. B; Ex. D; Tr. at 34-35, 56-57.
The individual testified that two of the listed collection accounts duplicate accounts on
which he has made payment arrangements and, with respect to a third account, he does not
recognize the debt and received no response to his request for information from a
commercial establishment that may have been the source of the information on his credit
report. Id. at 37-38.
The individual has an outstanding financial judgment which was filed in 2009 in the
amount of approximately $6000. The judgment resulted from a deficiency on an
automobile loan following the creditor’s sale of a repossessed vehicle. Id. at 39-40. The
judgment was partially satisfied through wage garnishment (while the individual was
working for a prior employer), but the individual is uncertain as to the amount that remains
outstanding. Id. at 62.
4 Following the hearing, the individual submitted a statement that he had completed his federal income tax
returns for 2011, 2012, and 2014, and had an appointment to meet with the IRS to submit these returns. See
Ex. E. During the hearing, the individual testified that it was possible that he owed taxes for these years;
however, his post-hearing submission is silent on his federal tax liability for these years. See id.; Tr. at 49.
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The individual is current on his payments on the vehicle that he now drives (and there are
no allegations that he has ever been delinquent on this obligation) and has no current
financial delinquencies other than those set forth in the Notification Letter. Id. at 40, 63.
Bankruptcy Petitions. The individual’s debts were discharged in 1998 as a result of a
petition under Chapter 7 of the bankruptcy code. Id. at 16. In 2004, the individual petitioned
for debt relief under Chapter 13 of the bankruptcy code; however, the petition was
dismissed due to the insufficient amount of time that had elapsed since his 1998 Chapter 7
discharge. Id. at 40.
In 2008, the individual petitioned for debt relief under Chapter 7 of the bankruptcy code,
which the bankruptcy court converted to a Chapter 13 petition. Id. at 41. The individual
decided to abandon the petition following the calculation of the payments that would be
required under Chapter 13, as the monthly payments exceeded the amount he could afford
as he was not employed at that time. Ex. A; Tr. at 41-42.
V. Analysis
I have thoroughly considered the record of this proceeding, including the submissions
tendered in this case and the testimony of the witnesses presented at the hearing. In
resolving the question of the individual’s eligibility for access authorization, I have been
guided by the applicable factors prescribed in 10 C.F.R. § 710.7(c)5 and the Adjudicative
Guidelines. After due deliberation, I have determined that the individual should not be
granted access authorization at this time. I cannot find that granting the individual a DOE
security clearance will not endanger the common defense and security and is clearly
consistent with the national interest. 10 C.F.R. § 710.27(a). The specific findings that I
make in support of this decision are discussed below.
A. Mitigation Evidence
At the hearing, the individual expressed understanding of the security concerns which arise
from a failure of a person to meet his or her financial obligations and the individual
acknowledged his financial problems. Tr. at 43, 69. He attributes his financial problems to
having been unemployed for two substantial periods of time as a result of workforce
reductions in 2007 and 2011 by the same major technology company. Id. at 20-21, 44.
Contemporaneously with the individual’s first lay-off, he and his then-wife went through
a tumultuous four-year period in which they separated and reconciled several times before
terminating their marriage. Id. at 18-19, 22, 45. During the periods of their separation, the
5 Those factors include the following: the nature, extent, and seriousness of the conduct, the circumstances
surrounding the conduct, to include knowledgeable participation, the frequency and recency of the conduct,
the age and maturity at the time of the conduct, the voluntariness of his participation, the absence or presence
of rehabilitation or reformation and other pertinent behavioral changes, the motivation for the conduct, the
potential for pressure, coercion, exploitation, or duress, the likelihood of continuation or recurrence, and
other relevant and material factors.
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individual was typically the custodial parent of their three children and, subsequent to their
final separation in 2011,6 the individual has had sole custody and full responsibility for
their children. Id. at 19.
The individual attributes his inability to resolve his financial delinquencies to having set as
his financial priority maintaining a home and supportive environment for his children. Id.
at 44-45. He notes that he has managed to do so during two substantial periods of
unemployment without resorting to any illegal acts. Id. at 45.
Since the individual began employment with the DOE contractor, he notes that he has
begun the process of correcting his financial irregularities by negotiating and instituting
payment plans with certain creditors and by communicating with both federal and state tax
authorities with respect to his tax non-compliance. Ex. B; Ex. D; Tr. at 9, 23-24. 34-39, 46.
As of the date of the hearing, five collection accounts had been fully settled and progress
payments had been made on three additional accounts. Ex. B; Ex. D; Tr. at 34-39.
Additionally, the individual was collecting the information he needed from the IRS and his
former employers in order to file the income tax returns that he had failed to file when they
were originally due.7 Id. at 23-24.
At the hearing, the individual testified that it was his intention to fully resolve all of his
outstanding financial obligations. Id. at 69.
B. Administrative Judge Evaluation of Evidence
At the hearing, the individual was candid and direct and, although he acknowledged
confusion on certain details of his tax matters and financial accounts, I found his testimony
to be highly credible. I also agree that the individual should be commended for maintaining
an apparently safe and nurturing home for his three children during the disintegration of
his marriage and his two substantial periods of unemployment.
While certain of the individual’s financial problems may have resulted from circumstances
beyond his control (i.e., his divorce and his losses of employment), the individual’s
financial irresponsibility originated before these events. The individual’s initial separation
from his wife and his first job loss both occurred in 2007. Id. at 18. However, the individual
and his wife had had their debts discharged pursuant to a Chapter 7 bankruptcy petition in
1998 and had unsuccessfully petitioned the bankruptcy court for debt relief again in 2004.
Id. at 16, 40. The individual’s history with the bankruptcy court evidences a pattern of
financial irresponsibility commencing prior to his first bankruptcy petition in 1998 and
continuing after the 1998 discharge of his debts under Chapter 7.
6 The individual and his ex-wife divorced in 2012. Tr. at 16.
7 During the period of time that the record was left open to receive additional documentation from the
individual, he communicated that he had completed his delinquent federal tax returns and had an appointment
with the IRS the following week to present his returns. He anticipated negotiating a payment plan for his
outstanding federal tax obligations at that time. See Ex. E.
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While the individual has made efforts to resolve his financial and tax matters (for which he
should also be commended), the record does not reflect any substantial efforts in this regard
prior to the LSO’s issuance of the Notification Letter.8 As of the hearing, the individual
continued to have (1) five collection accounts9 outstanding, (2) known federal tax debt in
the amount of $56,000, (3) unquantified federal and state tax debt for the five-year period
from 2010 to 2014, and (4) a financial judgment (approximately $6000) resulting from a
repossessed car which judgment was only partially paid (in an amount that the individual
could not specify) through the garnishment of the individual’s wages at a prior place of
employment. Id. at 23, 29, 30, 33-35, 39-40, 48-49, 51, 53-54, 56-59, 64-65.
In prior cases involving financial irresponsibility, Administrative Judges have held that
“[o]nce an individual has demonstrated a pattern of financial irresponsibility, he or she
must demonstrate a new, sustained pattern of financial responsibility for a period of time
that is sufficient to demonstrate that a recurrence of the past pattern is unlikely.” See
Personnel Security Hearing, Case No. PSH-11-0015 (2011); Personnel Security Hearing,
Case No. TSO-1078 (2011); Personnel Security Hearing, Case No. TSO-1048 (2011);
Personnel Security Hearing, Case No. TSO-0878 (2010); Personnel Security Hearing,
Case No. TSO-0746 (2009). Here, the individual has not rectified his financial difficulties
and, therefore, any period of reformation has not begun to run. See Personnel Security
Hearing, Case No. PSH-12-0075 (2012).
In addition to the individual’s known federal tax debt ($56,000), he has unquantified
federal and state tax liability as a result of having failed to his income tax returns as required
for 2011, 2012 and 2014.10 The individual acknowledged at the hearing that even though
he was aware of the legal requirement to file income tax returns annually he had failed to
do so for those three years and could provide no explanation for that failure. Tr. at 50. As
of the hearing, those tax returns had still not been prepared. Id. at 23, 27, 49. This evidences
not only financial irresponsibility but the knowing disregard of tax laws and regulations.
The disregard of laws, rules and regulations raises grave concerns with respect to a person’s
ability and willingness to comply with security rules and regulations and to protect
classified information. See Adjudicative Guidelines at Guideline E, ¶ 15. The individual’s
failure to file his 2014 tax returns is bewildering since he filed his 2013 returns (without
payment of taxes due) and, having completed his QNSP two months prior to the 2014 tax
filing deadline, he was aware of the DOE’s concern with respect to the timely filing of
income tax returns. Tr. at 30, 48-49, 64-65. See Ex. 6. This is recent conduct, for which no
mitigation has been offered. Tr. at 50.
8 Only four collection accounts (aggregating $530, at the same credit union) which were listed in the
Notification Letter appear to have been resolved prior to the LSO’s issuance of the Notification Letter. See
Ex. 1 at 2, Ex. 2 at 7.
9 If the individual is incorrect with respect to the duplication or inaccuracy of the accounts set forth in the
Notification Letter, there are eight outstanding collection accounts. See Tr. at 37-38.
10 The individual filed income tax returns for 2010 and 2013 without fully paying the taxes due for those
years. He believes that the $56,000 in outstanding federal tax debt includes amounts for 2010 and 2013;
however, he was uncertain as to the amount due to the state tax authorities for those years. Tr. at 31, 51, 53.
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Based on the foregoing, I find that the individual has not resolved the security concerns
associated with Criterion L arising from his collection accounts and outstanding financial
judgment, his tax matters, and his pattern of financial irresponsibility.
VI. Conclusion
In the above analysis, I have found that there was sufficient derogatory information in the
possession of the DOE that raises additional serious security concerns under Criterion L.
After considering all the relevant information, favorable and unfavorable, in a
comprehensive common-sense manner, including weighing all the testimony and other
evidence presented at the hearing, I have found that the individual has not brought forth
sufficient evidence to resolve the security concerns associated with Criterion L.
Accordingly, I have determined that the individual should not be granted access
authorization at this time. The parties may seek review of this Decision by an Appeal Panel
under the regulations set forth at 10 C.F.R. § 710.28.
Wade M. Boswell
Administrative Judge
Office of Hearings and Appeals
Date: August 31, 2016